IMF: Interest rates may have to rise in the United States, Eurozone and Japan

IMF chief Rodrigo Rato called on policy makers on Sunday to be
ready for a slowdown in the United States, despite the prospect of
strong growth in the world economy, and to tackle rising price
pressures.

Rato said interest rates may have to rise in the United States,
Eurozone and Japan.

He said policy makers needed to "act with foresight to head
off potential strains" from rising inflationary pressures in the
rich world, slower U.S. growth, high oil prices and increased
national protectionism.

To help keep inflation firmly in check, the U.S. Federal Reserve
may have to raise rates further, Rato said.

In Japan, Rato said, the authorities should raise rates only
gradually because there was little danger of an inflationary surge,
while the re-emergence of deflation would be costly.

In the Eurozone, Rato said further interest rate increases may be
needed if the 12-member bloc’s recovery develops as expected. But
inflation pressures in the Eurozone are broadly contained for now, he
said, adding that, faced with risks to growth, policymakers could
afford to be cautious in tightening monetary policy.

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